Buying a home is one of the most important goals in an individual’s life. But the continuing skyrocketing prices of the real estate sector makes it impossible to buy the home in full cash. Naturally, people hunt for financing options and home loans prove to be the best financial resource that will help you buy your dream abode and repay the money with easy EMIs. However, since the loan is availed for a span of around 20-25 years it’s important you choose your EMI figure carefully so that it won’t hamper your other financial goals. Also, it should prove affordable on your wallets in the long run else it will eat away a major portion of your income thereby leaving almost nothing for the household purpose, investments, and other commitments. Experts say your EMIs should not be more than 30-35% of your monthly income.
What is an EMI?
An EMI – Equated Monthly Instalment is a definite amount that one has to pay regularly during the loan tenure to the lenders. It’s a combination of principal amount + interest rate applicable on the borrowed amount. During the initial years lenders will keep the interest component higher compared to the principal amount and as the loan progresses in the later stage it’s the principal amount that keeps increasing and interest rates reverse. There are several aggregator sites online that will help you calculate an exact EMI on using home loan EMI calculator online with just a few clicks. You don’t have to visit branches or offices, devote time and energy for tedious calculation. It easy, quick & hassle-free. And you can use it 24*7 and chat online team to clear any doubts as well.
When you apply for home loans with leading non-banking finance companies and banks they would ensure that your loan eligibility and EMI is calculated on the basis of monthly income, credit score and property value. A buffer will be maintained between your income and EMIs so that you meet other expenses like child’s education fees, household expenses, car loan EMIs, etc. And lowering your EMI will help you increase your expenditure capacity.
So here are some quick ways to reduce the EMI on your home loans:
Go for Longer Tenure
If you wish to reduce your monthly premium you can opt for longer loan tenure. It ensures that your premium is affordable on your wallets and the money you earn can be evenly spread across for other financial commitments as well. However, people should remember they would have to pay a slightly higher premium if you wish to increase the loan tenure.
Higher Down payments:
Firstly, let us inform you that no lender will sanction 100% of the loan amount. Based on your loan eligibility you can get qualified for around 80-85% of the loan value. Thus, if you make a more down payment you will automatically reduce the debt and you will get affordable EMIs on your pockets.
Keep making prepayments:
Incentives, salary hike, returns from investment maturity are not for splurging. These are some of the avenues with a large number of monies. So, divert these funds towards prepayments. It will even reduce your EMIs to at a significant rate.
Hope these tips will help you reduce EMIs on your home loans and plan your finances better so you can live a comfortable financial life.